Perth vendors get shafted
Valuers in Perth have been accused of being out of touch with a market where prices are soaring, bringing damaging repercussions for sellers
Buyers are rallying behind the Perth property market at the moment, driving prices upward, but it hasn’t always resulted in good outcomes for sellers, according to some property industry figures.
Their concerns are property valuers in Perth are undermining sellers by intentionally using out-of-date valuation data. This comes as one local mortgage broker – who wishes to remain anonymous – claims she has come across cases where the difference was almost $50,000.
“Valuers are really killing the market by using three to four month-old valuations; they’re valuing properties based on old data,” she says, adding that her business is ‘constantly’ filing valuation disputes, because valuers have failed to update information.
“A few years back, when we had a boom and properties were selling for $40-$50,000 more, they were then afraid of being sued for overvaluing and now I think they really need to have the same concern for undervaluing.”
Not everyone agrees valuers are getting it wrong. Ballast Finance director Frank Paratore says it’s not an issue he’s come across at his Perth-based firm.
“You’re always going to hear about the isolated differences between valuers and what brokers are putting down or [seller’s] expectations,” says Paratore.
“There shouldn’t be that sort of issue in today’s market with all of the information to hand. With these real estate sites and RP Data or whatever, there should not be these issues at all… You always hear about a couple of issues with valuers, but it shouldn’t really be in the WA market because the WA market’s still holding up pretty firm.”
Yet the anonymous mortgage broker says this is precisely the issue: as the Perth market continues to rise, valuers are falling behind.
“Even though valuation isn’t an exact science there needs to be more care in terms of turnaround time and getting that data to the banks,” she says.
“The market is now starting to move and I’m getting valuers telling clients their property is not worth what they paid for it – but they’re using data that’s up to six months old. There was a long period of time where the property market was just not moving and they’re still using that data.”
Prices to peak in 2014
Global forces and debt constraints are likely to limit house price increases next year, according to Citibank (Citi) research.
“Our model suggests house price inflation may peak at around 3% by March 2014 and prices could fall slightly thereafter,” say Citi spokesmen Paul Brennan and Joshua Williamson.
Brennan and Williamson argue slowing Chinese growth and a fall in Chinese immigration into Australia, along with the lower Australian dollar and the limited appetite for further increases in loan size, will counter the favourable effect of low interest rates on house prices.
“We expect the slowdown in China to flow through to the Australian housing market during 2014, causing downward pressure on house prices.”
Recent changes to WA tenancy laws
The WA Residential Tenancy Act has undergone its largest revision in 30 years, which means as of July:
• Property Condition Reports are mandatory at the start and end of leases
• The lodgement and disposal of all bonds will be centralised through the Department of Commerce’s new Bond Administrator
• Emergency repairs can be organised by tenants if landlords don’t respond in 24 hours
• Minimum security standards for doors and windows are mandatory. All ground level doors, not protected by a standard security screen, must have deadbolts. All windows must be lockable. Deadbolts and screen doors must meet Australian standards. Front doors must have a porch light operational from indoors
• Information about tenants stored on databases can be corrected, clarified and amended by tenants if they believe it is inaccurate
• Fixed-term leases will not end automatically. Tenants in fixed-term leases must give 30 days’ notice of their intention to end the lease. If neither party gives notice it will roll into a periodic lease
Spotlight on: Perth’s fastest moving markets
If you’re planning a quick flip renovation, subdivision or development project – or any other property transaction where you’re not investing for the long-term – you’ll need to make sure the market you’re interested in has an abundant pool of buyers, where properties tend to move quickly off the market.
By looking at the average period owners hold their properties for, coupled with the average length of time properties are listed, we can see which Perth areas tend to have the fastest moving markets.
Ranking as the fastest is south-eastern suburb Piara Waters, where buyers tend to own their properties for less than four years before putting it back on the market again. Once on the market, these properties don’t stick around for long either, with the average time a property is listed on the market at just 74 days.
To put these numbers into perspective, the average Australian home is held for approximately 10 years and most properties listed on the market across the country sell within 110 days (three and a half months).
Suburb to watch
Caporn Young Claremont’s Richard Young explains why his suburb remains a blue chip market
Selling points: Claremont offers both security and a sustained high return on investment. Its prime location near the Swan River, easy access to the city and some of Perth’s prestigious schools are some of the main selling points. Claremont properties achieve strong long-term capital growth and the lower priced properties continue to yield high rental returns.
Sought after properties: There is a lot of demand for tired properties on big blocks and knock-over projects with development potential. Well-priced apartments below $600,000 are moving quickly as well.
Amenities: These include prestigious private schools such as Methodist Ladies College, Christ Church Grammar School, Presbyterian Ladies College and Scotch College. Claremont Quarter and the Bay View Terrace shopping strip are close by, as is the Claremont Showgrounds (host of the Perth Royal Show).
Best streets: Quiet, tree lined streets near the river. People like to be in walking distance of the water’s edge.
Public transport: Claremont has two main railway stations (Claremont and Loch Street) and trains run regularly. There is also the Show grounds railway station, which only runs during special events. There are various buses that run throughout the area, making it extremely accessible.
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